Seeking Doubt Clarification:
Dear All, Greetings,
I have a question. What wage should be mentioned (see the example below) for a new joiner during EPFO registration?
Basic Salary: 13,067.00
HRA: 4,355.00
Transport Allowance: 4,355.00
Gross Salary: 21,777.00
1. Only Basic+DA
2. Basic+DA+Allowance
3. Gross Salary
Which one of the above is correct as per EPFO
Thanks in advance
From India, Chennai
Dear All, Greetings,
I have a question. What wage should be mentioned (see the example below) for a new joiner during EPFO registration?
Basic Salary: 13,067.00
HRA: 4,355.00
Transport Allowance: 4,355.00
Gross Salary: 21,777.00
1. Only Basic+DA
2. Basic+DA+Allowance
3. Gross Salary
Which one of the above is correct as per EPFO
Thanks in advance
From India, Chennai
In this case it should be on Basic + Transport Allowance subject to statutory limit 15 k per month. If employer is interested they may pay beyond the Statutory limit 15k per month.
S K Bandyopadhyay ( WB, HOWRAH )
From India, New Delhi
335S K Bandyopadhyay ( WB, HOWRAH )
From India, New Delhi
The Supreme Court of India, in its rulings, has clarified the components of salary on which the Provident Fund (PF) contributions should be calculated. The key principle from these judgments is that PF contributions should not be limited to just the basic salary and dearness allowance (DA), but should also include certain other components that are paid universally, necessarily, and ordinarily to all employees.
These components can include:
Special Allowance: Any special allowance that is paid to all employees across the board could be considered part of the wages for PF contributions.
Cash Value of Food Concessions: The value of any food concessions provided by the employer to employees can be included in the wages for PF calculations.
Retaining Allowance: An allowance paid to retain employees in certain industries can also be considered part of the wages for PF contributions.
The Supreme Court emphasized that any payment made to employees which is not linked to an incentive for performance or output should be included in the wages for calculating PF contributions. This means that allowances paid uniformly to all employees without discrimination are considered part of the wages.
However, certain components are explicitly excluded from the definition of wages for PF purposes, such as:
House Rent Allowance (HRA)
Overtime Allowance (since it is paid for hours worked beyond the normal working hours)
Bonus (including statutory bonuses)
Commission (as it is generally linked to individual performance)
It's important for employers to carefully review their salary structures and consult with legal or HR professionals to ensure compliance with the latest legal interpretations and EPFO guidelines. The aim is to ensure that PF contributions are fairly calculated and that employees' retirement benefits are accurately reflected.
For More please refer case "Regional Provident Fund Commissioner (II) West Bengal vs. Vivekananda Vidyamandir and Others" judgment, delivered in February 2019.
Hope this information will be useful
Regards
From India, Mumbai
These components can include:
Special Allowance: Any special allowance that is paid to all employees across the board could be considered part of the wages for PF contributions.
Cash Value of Food Concessions: The value of any food concessions provided by the employer to employees can be included in the wages for PF calculations.
Retaining Allowance: An allowance paid to retain employees in certain industries can also be considered part of the wages for PF contributions.
The Supreme Court emphasized that any payment made to employees which is not linked to an incentive for performance or output should be included in the wages for calculating PF contributions. This means that allowances paid uniformly to all employees without discrimination are considered part of the wages.
However, certain components are explicitly excluded from the definition of wages for PF purposes, such as:
House Rent Allowance (HRA)
Overtime Allowance (since it is paid for hours worked beyond the normal working hours)
Bonus (including statutory bonuses)
Commission (as it is generally linked to individual performance)
It's important for employers to carefully review their salary structures and consult with legal or HR professionals to ensure compliance with the latest legal interpretations and EPFO guidelines. The aim is to ensure that PF contributions are fairly calculated and that employees' retirement benefits are accurately reflected.
For More please refer case "Regional Provident Fund Commissioner (II) West Bengal vs. Vivekananda Vidyamandir and Others" judgment, delivered in February 2019.
Hope this information will be useful
Regards
From India, Mumbai
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